Senator MARK BISHOP (12:30 PM)
—There are two aspects to the Defence Legislation Amendment Bill (No. 1) 2009 which are worthy of brief mention. The first concerns the payment of compensation to those who suffer unintended collateral damage and loss as a result of action against enemy forces, especially where those affected are local people whose support is so important in areas of engagement by Australian forces. Discussions on the merits of such a policy as provided by the Parliamentary Library are quite useful in this context and it is not worthy at this stage of further comment on my part. Suffice to say that the government’s preference to pay compensation as recognition that the loss caused should not have to fall on innocents is a most serious stricture in modern warfare. But where winning hearts and minds is so important, history tells us that it is vital in stemming the shifting allegiance to the insurgents. If Vietnam taught us anything, it taught us at least that much.

The point here though is not about the policy but about the technicalities of how the compensation is paid. Clearly, the system of act of grace payments is designed for ad hoc losses, losses that are not anticipated, but where it is considered that there is some public responsibility in the absence of any other means of compensation for innocent victims. In situations such as our military engagement in Iraq and where we are currently involved in Afghanistan there is some certainty, indeed it is almost forecast, that these circumstances will arise. We therefore need a more ready response than the cumbersome procedures in the act of grace scheme. This is simply a pragmatic amendment worthy of support.

With respect to the amendments to the home loan subsidy scheme it is of course natural that upon implementation some matters would arise which were not foreseen at the time of drafting and which require attention to make sure that the intention of the act remains consistent. Clearly, with this bill there have been some unintended consequences, especially in relation to eligibility where there has been a break in service and, naturally, ADF members have been quite confused. The act has not been clear enough and some windfalls have occurred which were not foreseen. These amendments close those loopholes and therefore are also quite worthy of support.

However, this particular program retains some problematic characteristics. As we know the scheme had its origins in the previous government as it sought to introduce additional incentives to retain ADF members in service. I should note, however, that the cost of the original subsidy, which stood at a maximum of $705 per month for those with over 12 years of service on the maximum loan, is now, as a result of the cut in interest rates, much reduced, indeed dramatically reduced, at that level by in excess of $300 per month. The subsidy remains valuable in relative terms but at a much reduced cost to the taxpayer.

I make one comment on this particular scheme—that is, while the ADF personnel should be assisted in homeownership like any other Australian and we accept initiatives such as this are important in retaining experienced people in the ADF, there is still a sense of a lack of equity in the totality of the design of the scheme. The reason for that is simply that a large portion of ADF personnel are not in a position to take advantage of the scheme as currently designed. This is not just because of the four-year qualifying period but also because the opportunity to purchase a home might not exist, particularly of course in the remote areas of our large continent. This then begs the question of the fairness and equity of defence housing support programs and allowances, particularly between those who have a rental subsidy and those who opt to buy their own home.

This is in fact a serious question for ADF personnel who must find themselves faced with exactly this choice. On the one hand, if you buy, there is a subsidy available and, on the other hand, if you choose to rent because purchase is not an option, there is no subsidy. I am not sure how they are advised on the financial implications of such a choice nor am I aware of any modelling done on which that advice can be given. Perhaps we might find out in due course along with an analysis which shows the taxpayer in the long term which is the preferred model having due regard to considerations of equity. Moreover, it is important for serving ADF personnel to know as well and hence my particular interest. With those comments, clearly, the bill is worthy of support.